Blockchain is a public distributed ledger technology that allows multiple parties to confidently, and virtually simultaneously, share access to the same data or databases of entries. Blockchain gained notice in 2009 because it’s the supporting technology behind cryptocurrencies like Bitcoin. And banks are interested because blockchain has the potential to streamline their processes, which are often time-intensive and expensive. Read on to learn more about the benefits of blockchain technology in banking and where it’s linked to new opportunities for you in 2018.
According to Accenture’s Banking on Blockchain: A Value Analysis for Investment Banks, the “long-term opportunity for banks is to repoint key operational, risk and finance systems to blockchain-based, shared data platforms.” Their analysis indicates that blockchain’s potential includes:
- 70% potential cost savings on central finance reporting
- 30–50% potential cost savings in compliance
- 50% potential cost savings on centralized operations
- 50% potential cost savings on business operations
Blockchain banking predictions for 2018
According to Research and Markets, “The global blockchain market is projected to witness a significant CAGR of 71.46 % during the forecast period to reach a total market size of US$4.401 billion by 2022, increasing from US$0.297 billion in 2017. Drivers include transaction transparency and data incorruptibility.
According to Finextra, 2018 growth will occur in the financial sector with FinTech payment systems, trade finance and insurance. Larger banks like the advantages of blockchain payment systems due to their “real-time processing, lower risk profiles, lower costs and transparency.” And the insurance sector “is expected to emerge as a ‘hot’ area for blockchain technology. Claims processing and complex multiparty processes like subrogation will show the business value of blockchain-based automation.”
Blockchain linked to new opportunities
While the Fintech 2.0 Paper: rebooting financial services reports that the technology may help banks skip upgrading legacy infrastructure with newer/faster processes, blockchain’s linked to more opportunities for you, such as:
- Digital transformation: Your customers are embracing digital transformation to meet changing business models, and blockchain will play a growing role. You’ll have to adapt to the needs of your customers.
- Governance: As blockchain’s use grows, companies will need to review their blockchain network governance policies.
- Cybersecurity: Blockchain’s distributed ledger approach to storing and sharing information can be a tool to prevent cyberattacks and security incidents by protecting identities, data integrity and critical infrastructure.
Ready to learn more? Read some of these helpful blockchain and digital transformation blogs: